The claims trends you’re likely to face — and the coverage you need to respond to them

The frequency and cost of claims trends against businesses have increased significantly in recent years, rising faster than the rate of inflation for just about every claim type, from health care to property damage to professional liability and beyond.

And it’s a claims trend that’s only going to continue. You should expect to face a claim related to one of the top three risk categories — management liability, cyber breaches and large-scale catastrophic (CAT) events — in the near future. Be prepared for a business insurance claim to affect your day-to-day operations and your bottom line.

Now is the time to prepare. Be ready to defend yourself against these top three claims trends:

1. If you’re in charge, you’re the target: management liability claims

With the increasingly litigious and regulated business environment, it’s more likely than ever that you’ll face a management liability lawsuit. Shareholders, employees, business partners, customers and third-party vendors have all become very aware of their rights, and as a result are now more inclined to sue a company as part of a class action, or to file a business insurance claim against its leadership — no matter how large or small the case.

It shouldn’t be surprising that more than one in four private companies has experienced a directors and officers (D&O) claim in the last three years, with average losses reported at between $387K and $17M.2

Depending on the business insurance claim, issues of management liability can be covered under several different policies, including D&O, professional liability, business crime and employment practices liability.

2. The new Wild West: cyber risk

Up to 80% of businesses have experienced a cyber attack in the last 12 months. Cyber crime follows no rules, and attacks come in many forms — hacking, extortion, ransomware, phishing, skimming and more. This makes them uniquely difficult to prevent.

Cyber attacks disproportionally affect small to mid-size organizations. In fact, of all cyber claims in 2016:1

  • Small businesses accounted for 49%, with average damages of $215K
  • Mid-size businesses accounted for 25%, with average damages of $487K

Data breaches affect every industry and can result in significant claims against your business.

In cases like these, your HUB broker is your secret negotiating weapon. With their deep expertise and experience dealing with business insurance claims against these coverages, they can help ensure you get the most favorable terms possible during the actual cyber insurance  policy process.

3. Don’t mess with Mother Nature: CAT events

2016 was the costliest year on record for losses due to natural catastrophes.2 Damages totaled $175B worldwide for the year, up more than two-thirds from 2015.

CAT events can touch every part of your business insurance and drain your resources. They can trigger claims of business interruption, total auto damage, and physical injury, including workers’ compensation. They can even result in directors and officers lawsuits filed by shareholders if company leaders didn’t have a disaster preparedness plan in place.  

Your HUB claims team will work to resolve your business insurance claims as efficiently as possible. We can connect you with emergency services and employ additional claims specialists to narrow the communication gap between you and your policy carriers until claims are resolved.

Don’t let claims cost you more than they should. Learn our brokers' best practices for building a robust claims response process. Read our guide: It's Never Too Early to Prepare for a Claim

1. Net Diligence 2016 Cyber Claims Study
2. Munich Re